The ‘Stabilization’ Hoax

April 7, 1952

Nothing has more clearly revealed the complete hypocrisy of the Administration’s so-called stabilization program than the Wage “Stabilization” Board’s decision in the steel case. The board granted the steelworkers’ unions practically every major demand of whatever nature. It awarded straight general wage increases of 17½ cents an hour, plus higher premium pay for workers on second and third shifts, plus reduction of geographical differentials, plus holiday pay and longer vacations. On top of all this, it recommended the union shop. Altogether, it is estimated that these changes would raise the steel industry’s direct labor costs by 25 to 30 cents an employee hour.

The industry itself estimates that these increases would cost the companies about $1,000,000,000 a year, which would require an increase of about $12 a ton in steel prices (now about $110 a ton) to offset it. It is not believed likely that price officials will grant increases of more than $5 or $6 a ton at most. But no one denies that some increase in the price of steel will be unavoidable.

Yet Nathan P. Feinsinger, the Wage Board chairman, blandly assures us that its recommendations, if adopted, “would not start another round of wage increases or set a new pattern.” This statement is flagrantly contrary to fact and experience. Philip Murray has already revealed that he will now extend his demands to steel fabricating plants. We shall soon hear from other labor leaders. As three of the Wage Board’s industry members declared: “Rather than resolving disputes, it is creating more disputes; rather than combating inflation, it is creating more inflation.” In the Wright Aeronautical case, as they point out, the board’s recommendation even exceeded the original union demand.

Technically the Wage Board’s “recommendation” is not binding. But in plain fact the pressure on industry is such that the board’s decision amounts to one-sided compulsory arbitration. The board solemnly tells the parties to the dispute to go ahead and arrive at its foreordained result by “collective bargaining”! This turns collective bargaining into a sham and a mockery. What is left to “bargain” on when the board has announced in advance that its decision is “in all respects fair and equitable”?

It is especially ironic and absurd, as the industry members of the board point out, that “the largest [wage] increases in history” should be recommended by a board “which purports to be engaged in stabilizing wages.” Worse, the board threw “the weight of the government in support of the proposition that employees should be required to join a union as a condition of holding their jobs.”

The board’s recommendations constitute compulsory arbitration for the companies but not, of course, for Philip Murray. He can simply threaten to strike if he does not get precisely the settlement he wants. And apparently no one in Washington questions the right of union leaders to bring the production of steel or anything else to a halt, even in wartime, unless their demands are met. As long as we grant legalized monopolies to industrywide unions, the only way we can prevent strikes is to give the union leaders just what they ask for.

Even if a sincere attempt were made to impose wage and price ceilings by a uniform rule, the economy would not be free and the controls would not work. But the existing situation is infinitely worse. Completely different standards and formulas are applied, and different agencies set up, to fix prices on the one hand, and to “stabilize” wages on the other. This process is a disguised and dangerous way of trying to effect a political redistribution of income. The insincerity of the whole “fight” against inflation is further emphasized by the objections of the Treasury and of Leon Keyserling to discontinuance of the inflationary bond-support policy by the Federal Reserve Board.

But Congress has one way out, before too much further damage is done. It can let the whole mess of price fixing and wage “stabilization” powers expire on June 30 next.